Understanding Value-Based Care and the Role PBMs Play

In today’s healthcare landscape, the shift towards value-based care is transforming how healthcare systems prioritize patient outcomes. This model focuses on providing high-quality care that improves health while reducing costs. Pharmacy benefit managers (PBMs) are starting to embrace value-based contracts and adopt a patient-centric approach by managing medication costs, improving access, and supporting better health outcomes. By aligning financial incentives with quality of care, value-based care creates a more equitable and effective healthcare system for both patients and providers.

Let’s dive into what value-based care is, the key benefits it offers, and the role that PBMs can play in advancing this model for long-term success.

What is Value-Based Care?

Value-based care is a healthcare model where providers, such as doctors, hospitals, and other healthcare professionals, are compensated based on the quality, efficiency, and outcomes of care they provide rather than the amount of services rendered. This means that rather than being paid for each individual service or procedure performed, like in a traditional fee-for-service model, providers are incentivized to keep patients healthy and deliver care that results in positive health outcomes. 

This is important because value-based care focuses on improving patient health and reducing unnecessary services. As a result, healthcare providers are encouraged to deliver more personalized, preventative, and efficient care.

Examples of value-based care include chronic disease management programs, where healthcare providers actively monitor and manage patients with conditions like diabetes or asthma to prevent hospitalization or emergency visits. Preventative care, such as regular screenings and wellness checks is another area where this model of care thrives, helping identify health issues early before they become larger, more costly problems.

Key Points Regarding Value-Based Care

Value-based care represents a fundamental shift in how healthcare is delivered and how its success is measured. Let’s take a look at some of the key elements that define this model:

• Patient Focus: At the core of this model is patient-centered care. Value-based care shifts the focus from simply treating symptoms or acute conditions to considering the overall health and needs of the patient for the long term. Providers take a more holistic approach, ensuring that patients’ individual goals, preferences, and health challenges are considered in the treatment plan.
• Payment Structure: Unlike the traditional fee-for-service model, where providers are compensated for individual service rendered, under a value-based care model, compensation is tied to the outcomes and quality of care provided. This ensures that healthcare providers are financially incentivized to deliver effective, cost-efficient care, reducing unnecessary services.
• Collaboration: Value-based care encourages collaboration across different healthcare specialities to provide comprehensive care to patients. This approach breaks down silos between departments and ensures patients benefit from coordinated care throughout their treatment journey and that the full spectrum of their healthcare needs are addressed.
• Preventative Care Engagement: By proactively addressing health problems before they escalate into more serious conditions, providers can improve patient outcomes and reduce overall healthcare costs. A value-based care model encourages regular check ups and screenings to empower patients to take charge of their health. Preventative care not only enhances the patient’s quality of life but also reduces the financial burdens of more costly care, such as emergency care and hospital stays.
• Data Analytics and Technology: Healthcare providers in a value-based care model rely on real-time data to track patient health, identify trends,and make informed decisions. Through data-driven insights and the use of online tools, healthcare professionals can monitor the effectiveness of treatments and predict health risks, ensuring patients the best possible care.
• Success Metrics: In value-based care, success is measured on the quality of care providers deliver, rather than the volume of services they perform. This is accomplished by tracking key performance indicators (KPIs) such as patient satisfaction, readmission rates, and overall health outcomes.

Together, these key components help create a healthcare system that prioritizes quality, efficiency, and outcomes over quantity and profits, all while reducing unnecessary spending. This framework leads to numerous benefits that directly impact both patients and providers. Let’s take a look at some of the main benefits!

What are the Benefits of Value-Based Care?

The benefits of value-based care extend beyond just improved health outcomes (though that is a BIG one!), they improve the healthcare experience for everyone involved. Here are some key advantages:

• Better Health Outcomes: Value-based care emphasizes prevention and chronic disease management, which helps reduce hospital admissions, complications, and promotes long-term health. Providers are incentivized to proactively manage their patient’s health, leading to better overall health outcomes.
• Lower Costs: By focusing on preventive care and reducing the need for unnecessary hospitalizations and expensive emergency room visits, value-based care lowers overall healthcare costs for both patients and providers.
• Better Coordination Across Care: This model fosters collaboration among providers across different specialties, creating a more coordinated and comprehensive care experience for patients. This better helps address patients needs and reduces gaps in care.
• Improved Patient Satisfaction: Patients tend to report higher satisfaction because value-based care focuses on personalized treatment, convenience, and engagement. This patient-first approach strengthens the relationship between patients and their providers.
• Incentivizing Preventive Care: Unlike the fee-for-service model, value-based care rewards preventive measures. This approach encourages patients to take charge of their health and actively work towards better health outcomes, helping avoid the need for costly treatments in the long term.

How Do PBMs Fit into the Value-Based Care Model?

So how do PBMs fit into all of this? In recent years, PBMs are transitioning from volume-based to value-based care, where the emphasis is on improving patient outcomes and reducing costs. Modern, transparent PBMs play a crucial role in this shift by focusing on lowering prescription medication costs, improving access to necessary medications, and managing benefits that contribute to better health outcomes.

In 2025, more PBMs are expected to enter value-based contracts that reward the positive patient outcomes. These contracts incentivize PBMs to ensure prescribed medications lead to improved health, helping to prevent costly complications and reduce hospital visits. Modern PBMs work closely with healthcare providers to optimize medication regimens, ensuring patients receive the most effective and cost-efficient treatments. They also leverage data and online tools to track medication adherence, identify cost-saving opportunities, and improve overall care.

As more PBMs embrace value-based contracts, they are helping to drive the shift toward better, patient centric care, ultimately contributing to healthier populations and a reduction in healthcare costs.

How SmithRx is Transforming Pharmacy Benefits with Value-Based Care

At SmithRx, we believe in an approach to pharmacy benefit management that puts people first. We are dedicated to improving patient outcomes while making healthcare more affordable and accessible for employers and their employees. Online tools like our member portal and partner portal make it easy for members to manage prescriptions and access health information, while helping partners streamline pharmacy benefits and access reporting and other valuable insights. Our Connect 360 program helps lower medication costs for members while providing employers with cost-effective solutions. Our focus is on people. When the population is healthier, they not only save on healthcare costs but also enrich their lives and their communities.

Want to learn more about how PBMs and value-based care can work together to transform healthcare? Reach out to a SmithRx representative today. We’d love to hear from you!